Editor’s note: This story originally appeared on Personal Capital.
Investors have largely stayed on course throughout the pandemic, according to a new national survey by Kiplinger-Personal Capital that finds that 63% of retirees and close retirees have stuck to their retirement plans in the past year, despite recent market volatility as seen last month. Just. .
Even in the midst of the ongoing global pandemic, retirees and close to retired retirees remain cautiously optimistic about their retirement and the economy; 3 out of 4 say they are “very or somewhat confident” that they will have enough income to live comfortably throughout retirement.
So what does the average portfolio look like for retirees and near-retirees who have done well in the past year? The survey, which included 772 respondents aged 40 and over, found that portfolios, on average, consist of the following:
- 35% stock
- 26% cash
- 15% bonds
- 9% real estate
- 15% other
Asset allocation to investors remains conservative across races, ages, and whether or not investors are retired.
Here’s a closer look at how their portfolios collapse, as well as some tips for retirees and retirees.
The epidemic affects investment habits
However, more than 1 in 5 (22%) said they became more risk-averse after seeing how quickly the market could change. Only 13% reported feeling optimistic about the stock.
High-income investors ($200,000+) were nearly three times more likely than less affluent investors to say they were becoming increasingly optimistic in 2020 and added stocks to their portfolio.
This may be due in part to the fact that they were more likely to report a “significant” increase in the value of their portfolio during the pandemic than investors with incomes below $200,000 (22% vs. 12%).
Despite the US stock market ending 2020 at a record high and total household net worth at record levels, more than half (54%) of investors have reported only moderate gains in their portfolios since the beginning of that year.
Nearly a third (32%) have changed their asset allocation since the pandemic. Among those who made the changes:
- Added 13% more shares
- 9% bond added
- Increased 9% of their cash or cash-like possessions
But confidence may be waning for new retirees, with 29% of those who entered retirement recently saying they feel “extremely confident” about their future income, compared to 53% of those who were in retirement, or at least retired. 15 years now.
Average portfolio balances among investors 50+
According to anonymous data from more than 3 million Personal Capital dashboard users pulled this month, investors in their 50s and 60s hold between 39% and 42% of their portfolio assets in US stocks, about 10% in international stocks, and about 7 % to 11% in US bonds, and 21% to 23% in cash.
The median value of the highest assets* in the portfolios for these age groups is as follows, as of September 23, 2021:
|age |||Cash||| US stocks |||US bonds |||international bonds|
|fifties||$99,474.10||$443,634.53||USD 44295.76||92806.78 dollars|
|60 seconds||124,734.98 USD||$462,867.40 USD||$96986.29||$99,477.79|
* Approximately 9%-12% of assets are unclassified.
Older investors, in their 70s and older, hold 38% to 39% of their portfolio assets in US equities, 6% and 9% in international equities, 26% to 31% in cash, and 12% to 13% in US bonds.
The median value of the best portfolio assets* for these age groups is as follows:
|age |||Cash||| US stocks |||US bonds |||international bonds|
* The data does not include assets classified as unclassified.
Older investors tend to be more biased towards the motherland. Investors in their 80s have 85% of their stock exposure in the US, and investors in their 90s have 88.5% of their stock exposure in the US
Top tips for retirees and retirees virtually in volatile times
Regardless of the age of the investor, the market volatility that is occurring now is not for the faint of heart. But for those who are about to retire or have recently retired, many are wondering what they should do during a market downturn.
“It’s terrifying to see someone pull back in the market when they’re about to retire,” said Jesse Beeburn, a senior financial advisor in the Denver office of Personal Capital. “We hear a lot of questions from these people who ask, ‘If I lose 20% of my portfolio, will I still be able to retire? “And if proper planning is done, then yes you absolutely can.”
Here are some tips to keep in mind to make sure your retirement plans can weather the vagaries of the market.
- Make sure you diversify properly.
- Keep your spending on track.
- Make sure your risk tolerance matches your retirement plans.
- Don’t forget the long-term needs.
As we head into retirement, now is not the time to overspend. Instead, you should spend less. Lifestyle modifications are often more impactful than modifications in your wallet.
Just because your medical expenses aren’t high when you reach retirement, it doesn’t mean you shouldn’t plan for higher medical expenses later in life or for those unexpected costs that may cloud your plans.
Bottom line: The best advice for retired or close retirees is to review your strategy regularly with a credit financial advisor to ensure it is properly updated in light of market changes.
The Kiplinger-Personal Capital National Survey on the Impact of the Pandemic on the Confidence of Retirees was conducted June 17-24, 2021, with 772 respondents, none of whom were clients of Personal Capital Advisors Corporation (PCAC) wealth management.
The survey’s margin of error is +/- 3.52%. Respondents were screened for age (40 and over), retirement status (fully or partially retired, or planning to retire within five years) and net worth (at least $100,000).
Below is the demographic profile of the survey:
- average age: 65
- Median household income before taxes in 2021: 127,688 dollars
- functional status: 76% are fully or partially retired (of which 81% have retired within the last 15 years)
- Average household net worth excluding primary residence: 728,821 dollars
- gender: 49% male; 51% female
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